Strategic Industrial Expansion for 2026

Threats are slanted to the downside. In case of an extended dispute, the present influence on the region will be compoundedthrough elevated energy and food prices, decreasing trade, tourist and remittances, increased fiscal pressures, and displacement. "The present crisis is a plain reminder of the work ahead for the area: not just to weather shocks, but to rebuild more resilient economies with more powerful macroeconomic fundamentals, innovate and enhance governance, invest in infrastructure, and enhance employment-creating sectors," said.

With peace and the right action, countries can develop the institutions, capabilities and competitive sectors that create chances for individuals." With this long-term vision in mind, the report takes a close look at the region's potential for industrial policy federal government actions to increase strategic service activity as a driver of economic growth and job development.

ANSR July GCC PRs 50DR+

Governments in the area have adopted industrial policy at a high rate in the last decade, typically through sovereign wealth funds and state-owned enterprises, however the outcomes have actually been mixed. The report highlights the critical requirement for strong organizations and cautious targeting of policies. "As countries face the heavy toll of today conflict, it is very important to also not forget the work needed for long-lasting peace and prosperity," stated.

Future Investment Landscape of Arabia

Q2 2026: The ICAEW Economic Update Middle East, is a quarterly economic projection for the region prepared straight for the financing occupation. The GCC economy faces a marked contraction this year pending details of the US-Iran contract to end the war. We expect energy circulations, tourist and financier sentiment to slowly normalise as war interruptions decrease.

ANSR July GCC PRs 50DR+

The interim agreement between the United States and Iran is a substantial action towards reaching a full-blown offer. A full go back to normality in the Strait of Hormuz will likely take time, however the threat of a recession-inducing oil rate spike has declined. Global GDP is anticipated to grow by 2.4% this year, 0.2 ppt less than we forecasted three months earlier, and 3.1% in 2027.

We forecast a 4.1% contraction in Middle East GDP this year (versus forecasted 3.6% growth before the war), greater than the decrease in the first year of the Covid pandemic. Kuwait, Iran, Iraq and Qatar stand out as the hardest struck, owing to their inability to avoid the disturbance to regional shipping, war-driven facilities damage and tourism losses.

Our 2026 outlook for the GCC is weaker than 3 months earlier, with GDP projection to agreement by 2.4% compared to a 0.2% decline projected previously. We anticipate Oman and Saudi Arabia to be the least negatively affected by the fallout from the dispute, with both economies continuing to broaden this year.

The financial damage sustained in the last couple of months is significant. Saudi GDP data for Q1 showed development slowed to 3% y/y, with non-oil activities broadening by 2.9%, the weakest speed given that the Covid pandemic. On a seasonally changed basis, GDP contracted 1.2% q/q, driven by a 6.8% fall in oil activities as the Strait of Hormuz disruption hit late in the quarter.

Mastering Investment Diversification for a Global Economy

Aside from Oman, all GCC manufacturers in addition to Iran and Iraq have suffered comprehensive oil and gas production losses considering that the start of the conflict. May data reveal local production almost cut in half from pre-war levels, with the decline deepening relative to March and April. Rerouting efforts, consisting of by Saudi Arabia through the East-West Pipeline and the UAE through the Habshan-Fujairah pipeline, have assisted prevent an even larger plunge in output.

ANSR July GCC PRs 50DR+

We anticipate GCC oil sector output to agreement by 14.5% this year, which will mark the steepest decrease in several decades. We then expect a 23.5% rebound next year, driven mostly by normalisation from a severely depressed base. On the other hand, oil prices have actually been volatile, relieving listed below $85 per barrel as the interim arrangement was revealed.

In the medium term, we expect oil costs to be a little lower than our pre-war baseline, as the UAE's departure from OPEC+ permits a gradual increase in its output towards the 5mn barrel daily production target as soon as trade normalises. Against this background, the UAE will speed up the building and construction of a brand-new West-East pipeline that ought to double the capability of export through Fujairah.

The May PMI studies reported output growth reaching its strongest level in three months, driven mostly by improved domestic need. However, they remain listed below long-run averages, with weak export orders and cost pressures from higher product and transportation costs are a typical style. Overall, we expect a 1.1% contraction in GCC non-energy sectors this year (compared to 4.2% development pre-war) and a steady recovery over the remainder of the decade.